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Mr. Fallon: I cannot assist my hon. Friend. I was not in government at the time. I do not know how that was done, but at least the nationalised industries recognised some restraint. They gave themselves power to borrow up to a particular sum, which could be increased once, by order, and that was it. They then had to come back, which they did, with fresh legislation--another British Shipbuilders borrowing limits increase Bill, for example.
As the new clause is drafted, the Minister does not have to come back to the House, except through statutory instrument, and there is no limit to the number of statutory instruments that she can promote. She can come back and help herself to another £100 million, week in, week out. Indeed, she can double or treble the £400 million.
That is a meaningless limit, because the new clause that introduces it gives the Minister the power to increase it, which she can do by statutory instrument. We all know the deficiencies of that procedure. I hope that when the Minister sums up, she will give us some reassurance that the £400 million limit is for the first five years or whatever, and that she has no immediate plans to come back when Partnerships UK takes a fancy to a particular investment proposal, or, as we get nearer to an election, is cajoled into investing in a project that has a high political profile but which the market otherwise would not touch.
We are justified in asking the Minister to do that. The reason is simple. The £400 million is being provided, essentially, for Partnerships UK to invest in projects in which the market is not prepared to invest fully; otherwise it would not be necessary. The Minister should at least be able to clarify where the figure of £400 million came from, the time scale over which it will last--I assume that it is not an annual total--and the prospects of her coming back to extend it.
Subsection (2)(d) of the new clause deals with the arrangements that the Treasury proposes to make for "evaluating outstanding expenditure". I have not seen that phrase before. Evaluating outstanding expenditure should be done by some body other than the Treasury. It is the Treasury's money, which it is giving to Partnerships UK, and we will want to judge not just the record of PUK in spending its way through the £400 million, but the
Treasury's wisdom in giving it the money in the first place. The Treasury should not be judge and jury, deciding how well the money was spent.
I would support any of the independent arrangements proposed in other amendments. Indeed, I would have hoped that the evaluation could have been done independently, and that the Treasury would have seen no problem in inviting another body--the NAO or the CAG, for example--to make the evaluation.
Amendment No. 14 is a helpful amendment. It distinguishes much more carefully between the upstream and the downstream activities. There was an exchange on that involving my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley). When my hon. Friend ran through a little menu of upstream activities, he did not touch on the provision of interim finance. He described his approach as reasonable, but I wonder whether he and my hon. Friend the Member for Arundel and South Downs are not being a little too reasonable in the drafting of the amendment.
I am not at all clear what "interim finance" for a feasibility study is. Either it is finance, or it is not. How can it be "interim"? Is it a loan? Is it a grant? If it is a loan or a grant, how can it be justified as an upstream activity? Perhaps my hon. Friend can help.
Mr. Flight:
The activity is upstream because it ceases when the PFI deal is signed. Finance is provided for feasibility studies of, for example, potential local government PFI projects. As I said in my speech, when those projects are finally negotiated and put to bed, the money will be repaid from the total finance for the project. The Treasury could repay it. The inclusion of that in upstream activities is intended to support the objective for Partnerships UK--
Mr. Deputy Speaker (Sir Alan Haselhurst):
Order. The hon. Gentleman cannot make a winding-up speech in an intervention.
Mr. Fallon:
I apologise, Mr. Deputy Speaker, if I tempted my hon. Friend too much. However, I want to press the point. What happens if the feasibility study recommends that the project should not go ahead? What will happen to the finance? Will it be repaid? If so, who will repay it? Does it constitute a grant that will simply be written off? I am unhappy about allowing Partnerships UK to go even further than the existing Treasury taskforce and start spraying public money around town halls on all sorts of feasibility studies for projects such as supertrams that will not be realised, and for which we will not get our money back. Perhaps my hon. Friend the Member for Bury St. Edmunds can assist?
Mr. Ruffley:
I seek not to assist my hon. Friend but to ask a question. If the Treasury taskforce were involved in upstream activity, who would bear the loss if a feasibility study was undertaken but the project did not go ahead?
Mr. Fallon:
The Treasury would bear the loss. I hesitate to criticise my hon. Friend because he is a distinguished lawyer, but perhaps the phrase "interim finance" needs more work. However, amendment No. 14 is helpful.
I hope that my hon. Friends on the Front Bench will be robust about new clause 7. I oppose it. My hon. Friends have already criticised it so strongly that I conclude that we should not accept it and I hope that, such is the power of their arguments, the Economic Secretary will reconsider it. At least she said that she was trying to allay some concerns and did the House and the Committee the courtesy of acknowledging that anxieties exist. They have been expressed to the Select Committee by all sorts of reputable bodies and by those who we want to be engaged in the specific work that we are considering.
If the Economic Secretary acknowledges the problem, I hope she will also recognise the solution. We need much firmer controls on the expenditure that we are discussing, and they must be qualitative as well as quantitative. Simply sticking a figure into the Bill and claiming that, however messy matters become, at least the amounts will not exceed £400 million does not satisfy the genuine anxieties of Conservative Members and industry.
Mr. Letwin:
Before I begin, I shall reiterate the declaration of interest that I have made repeatedly on Second Reading and in Committee in relation to the Bill and the amendments: slightly ironically, when I have spoken, it has been against my interests.
The most important feature of the debate on new clause 7 and the accompanying amendments has been that we have revealed a symptom of the problem with the Bill. Hon. Members have tackled the vexed question of the scope of the application of the £400 million limit for which new clause 7 provides. I do not generally prefer to spot a conspiracy when error will serve as an explanation. On the principle of Occam's razor, one should always choose the simpler explanation. It could be mere oversight, as the hon. Member for Kingston and Surbiton (Mr. Davey) suggested, that the £400 million limit does not cover clause 16(1)(a). However, if that is the case, I am surprised that the Economic Secretary has not brought it to our attention. I have two reasons for supposing that it is not the case.
First, the articulation of new clause 7 and amendment No. 28, and the original distinctions in clause 16(1), lead one to conclude that there is meant to be a difference between incurring expenditure in the initial phase and thereafter. That suggests that the £400 million limit has been specifically targeted at expenditure after the initial phase, rather than through mischance. It is notable that new clause 7(1), to which amendment No. 28 refers, makes it clear that the original phrase in clause 16(1)(b)--"may provide financial assistance"--needs to be expanded. In amendment No. 28, proposed new paragraphs (b) and (c) of subsection (1) read:
On a layman's statutory construction, I incline to the view that the scope of clause 16(1)(a) is not only uncapped but unlimited. To take an absurd example, it could permit the expenditure of billions of pounds on
may incur expenditure for the purposes of investing in the body . . . and may provide loans and guarantees and make other kinds of financial provision.
New clause 7 invites us to perceive a fundamental difference between clause 16(1)(a), which will not be capped by the £400 million limit, and provides that the Treasury,
may incur expenditure in respect of the establishment of a body,
and proposed new paragraphs (b) and (c) of subsection (1), which provide that the Treasury,
may incur expenditure for the purposes of investing
29 Feb 2000 : Column 200
in the body, or
There may be some deep inwardness that we laymen miss. However, if that is the case, I am again surprised that the Economic Secretary has not seen fit to intervene and correct us amateurs on the basis of advice from her gurus.
may provide loans and guarantees.
the establishment of a body.
I am sure that the Economic Secretary will tell us that it is not the intention of the prudent Chancellor of the Exchequer to permit billions of pounds of expenditure to be incurred. However, if I am right, and the scope of clause 16(1)(a) would allow for such investment, the massive concession that my hon. Friend the Member for Arundel and South Downs (Mr. Flight) so painstakingly eked out of the Government--that new clause 7 should impose a limit of £400 million--is vapid, nugatory, empty and meaningless: the £400 million limit is no limit.
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